Appraisals are done often in real estate and are a vital part of determining property value. Knowing the basics can be beneficial no matter what stage of property ownership you fall into.
An appraisal is done by a licensed professional to thoroughly examine a property to figure out its value. During the appraisal process, the appraiser inspects the structural quality, comparable local homes for sale on the market, checks for safety hazards and more to determine the property value.
If an appraisal comes back low, do not fret, as there are several options to fix the issue. First, it’s vital to determine the cause of the low appraised value. This may include figuring out if recent data was used in relation to the local comparable properties, if repairs need to be done or if market conditions are at play.
Things such as a hot real estate market can put a strain on local appraisers, so sometimes in these conditions the job is rushed - not giving an accurate estimate.
There are three main appraisal approaches used in the world of real estate. These methods include:
If you feel like an appraisal is incorrect, it’s best to do research on the local market and work closely with an appraiser for the best results.